AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
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Chapter 5, Problem 10RQ
To determine
Differentiate among the auditor’s potential liability to the client, liability to third parties under common law, civil liability under the securities laws, and criminal liability. State one situation for each type of liability in which the auditor can be held legally responsible.
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Distinguish between the legal concepts of actually foreseen third-party users and reasonably foreseeable third-party users. How does each concept establish a basis for an auditor’s legal liability to third parties?
Explain the auditor legal liability, this includes what law that procure such liability?
What is the auditor's obligation in light of the prudent person concept?
Chapter 5 Solutions
AUDITING+ASSURANCE 12MONTH ACCESS CARD
Ch. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - Prob. 9RQCh. 5 - Prob. 10RQ
Ch. 5 - What potential sanctions does the SEC have against...Ch. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14.1MCQCh. 5 - Prob. 14.2MCQCh. 5 - Prob. 14.3MCQCh. 5 - Prob. 15.1MCQCh. 5 - Prob. 15.2MCQCh. 5 - Prob. 15.3MCQCh. 5 - Prob. 16.1MCQCh. 5 - Prob. 16.2MCQCh. 5 - Prob. 16.3MCQCh. 5 - Prob. 17DQPCh. 5 - Prob. 18DQPCh. 5 - Prob. 19DQPCh. 5 - Prob. 20DQPCh. 5 - Prob. 21DQPCh. 5 - Prob. 22DQPCh. 5 - Prob. 23DQPCh. 5 - Prob. 24DQPCh. 5 - Prob. 27DQPCh. 5 - Prob. 28C
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Similar questions
- How does the prudent person concept affect the liability of the auditor?arrow_forwardFor what type of actions can clients bring suit against auditors under common law? What must clientsprove prior to bringing suit in each case?arrow_forwardWhat is the auditors responsibility regarding the noncompliance with laws by a client?arrow_forward
- In your words, what is the legal responsibility of the auditor?arrow_forwardDescribe the action that an auditor should take if an attorneyrefuses to provide information that is within the attorney’s jurisdiction and may directlyaffect the fair presentation of the financial statements.arrow_forwardWhat types of actions may an auditor be liable to a client under common law? Why would the clients prefer to sue the auditor for tort action rather than a breach of contract?arrow_forward
- 4) Explain if, and why an accountant will be held liable to: its client, to 3rd party intended users of the financial statements and audits it prepares for its client, and to reasonably foreseeable users of the work, it prepared for its client. ∙ Be sure to identify who reasonably foreseeable users would be and why the accountant is responsible to them in the absence of privity.arrow_forwardHow would an auditor communicate known there are violations of the law and the auditor's responsibilities according to the law?arrow_forwardAuditors may be held liable to both their clients and third parties under common law. a. What must a client prove to recover its losses from the auditors under common law? b. In a court that adheres to the precedent set by the Ultramares v. Touche case, what must an ordinary third party prove to recover losses from the auditors under common lawarrow_forward
- What is the auditor's primary concern with respect to related party transactions?arrow_forwardWhat does a third-party user of financial statements have to prove under common law in a suit against an auditor for the auditor's negligence? Explain each item with an examplearrow_forwardDescribe the due diligence and causation defenses available to auditors under the Securities Act.arrow_forward
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